This just crossed our desk in a case we've been following (link includes the numerous merits and amicus briefs filed in the case), the California Supreme Court's opinion, authored by the Chief Justice in California Building Industry Ass'n v. City of San Jose, No. S212072 (June 15, 2015).
The bottom line is the court agreed that rational basis review is the applicable standard:
As noted at the outset of this opinion, for many decades California statutes and judicial decisions have recognized the critical need for more affordable housing in this state. Over the years, a variety of means have been advanced and undertaken to address this challenging need. We emphasize that the legal question before our court in this case is not the wisdom or efficacy of the particular tool or method that the City of San Jose has adopted, but simply whether, as the Court of Appeal held, the San Jose ordinance is subject to the ordinary standard of judicial review to which legislative land use regulations have traditionally been subjected.
Slip op. at 64. You remember rational/conceivable basis judicial review, right? As Professor Richard Epstein put it, "[w]henever a judge turns to rational-basis analysis, he's basically saying, 'You think two plus two equals five, and I don't know how to add.'" We call it "space aliens might have done it" review, because, as Professor Gideon Kanner pointed out, the Ninth Circuit once noted it would uphold a law "if . . . the person sponsoring the bill said, 'Space aliens are visiting us in invisible and undetectable craft, and that’s the basis for my legislation.'"
That case challenged San Jose's "inclusionary housing" requirement, which requires developers of residential projects of more than 20 units to set aside 15% for purchase at below-market rates by those earning no more than 110% of the area median income. Alternatively, a developer could either construct affordable housing on a different site, dedicate land, or pay an in lieu fee "not to exceed the difference between the median sale price of a market-rate unit in the prior 36 months and the cost of an 'affordable housing' unit for a household earning no more than 110 percent of the area median income." A waiver is available if the developer can show the lack of a "reasonable relationship" between the impact of the project and the exaction, or that applying the ordinance would result in a taking.
The Court of Appeal held that under rational basis review (and not heightend scrutiny) San Jose's affordable housing exaction might survive because it was designed to promote the development of affordable housing, and not to mitigate the impacts of market priced housing. California Building Industry Ass'n v. City of San Jose, 216 Cal.App.4th 137 (6th District June 6, 2013).
The California Supreme Court agreed to hear the following issues:
What standard of judicial review applies to a facial constitutional challenge to inclusionary housing ordinances that re quire set asides or in - lieu fees as a condition of approving a development permit? (See San Remo Hotel L.P. v. City & County of San Francisco (2002) 27 Cal.4th 643, 670.)
We haven't had a chance to read the Supreme Court's 64-page opinion and two concurring opinions in detail yet, but they appear to be based in part on U.S. Supreme Court precedent, thus teeing this case up for further review by SCOTUS.
And we all know the California Supreme Court's track record in that court, don't we?